The deadline for those who were granted an extension to file taxes for the 2024 tax season is Tuesday. Gordon Law Partner tax attorney and CPA Andrew Gordon joins Brad Smith on Wealth! to discuss what taxpayers need to know, whether they are filing for the 2024 expansion or preparing for 2025.

“Next Tuesday is the tax deadline, and unfortunately, there are no more extensions, but if you cannot file, it's typically because of one of two reasons or both. It's either because you can't file, you don't know how much you owe, or you can't pay.” Gordon explains in both cases, it’s better to file sooner rather than later to avoid hefty penalties.

“If you don't know how much you owe because you don't have a tax document, you haven't completed your bookkeeping, or for whatever reason it may be, it still makes sense to file with an estimate and later amend, and that's because there is a substantial penalty for failure to file.”

Similarly, “ if you can't pay, it still makes sense to file as soon as you can. In fact, the IRS is willing to work with most taxpayers on a payment plan and allow you to pay over time and so if you're holding back on filing because you're afraid you can't pay, you don't have the money now, that's not a good reason not to file. You should still file because you'll save yourself substantially on penalties.”

He notes, “The penalty for failing to file is ten times the penalty of failing to pay. The failure to file a penalty is 5% per month that you failed to file. So if you can file as soon as you can after the deadline, that's still better than waiting longer and longer.”

For those looking to avoid falling behind in the 2025 tax season, Gordon says, “One great strategy is to pay estimates quarterly. If you know that you're going to have a tax balance at the end of the year, both to reduce potential penalties and interest and also just to help with your own cash flow, it may make sense to pay quarterly estimates based on what you either owed the prior year or what you think you'll owe this year.”

He says, “That way, when tax time comes, or even the extension deadline comes, you're not worrying because you don't have the money to pay.”

To watch more expert insights and analysis on the latest market action, check out more Wealth here.

This post was written by Naomi Buchanan.